British broadband and DTH giant Sky has launched a €600m (US$653m) bond to refinance the last piece of bridge debt backing last year’s takeover of its sister companies in Germany and Italy.
The senior unsecured floating rate notes due 2020 priced…
British broadband and DTH giant Sky has launched a €600m (US$653m) bond to refinance the last piece of bridge debt backing last year’s takeover of its sister companies in Germany and Italy.
The senior unsecured floating rate notes due 2020 priced at 99.901%, with a coupon of 75bps over three month EURIBOR that translates to 77bps on a re-offer basis.
Barclays and Societe Generale served as active bookrunners.
When the bridge was issued it was priced at a floating rate – at a margin over EURIBOR – hence why Sky has issued floating rate notes to pay it off. Sky saw the euro debt market as particularly receptive to floating rate notes with maturities in the range of three to five years, a person familiar with the transaction told SatelliteFinance.
“After all professional, advisory, rating agency and legal fees, and based on current EURIBOR rates, the company expects the blended pre-tax cost of the new bonds issued to be less than 1% per annum,” Sky said.
“Sky’s overall pre-tax cost of debt is less than 4% per annum and average maturity across the total bond portfolio is 7.5 years.”
The latest offering has not effected Sky’s net debt pile, which stood at £6.27bn (US$9.34bn) as of 31 December 2014. At the time it disclosed a net debt to EBITDA ratio of 3.2x.
As well as refinancing the bridge facility for the Sky Italia and Sky Deutschland acquisitions, which closed in November, it provides funding to acquire the roughly 4% of the latter’s stock currently held by minority shareholders. Sky plans to buy those shares through a “squeeze-out” process later this year.
The satellite broadcaster completed the financing to fund its European expansion when it raised about US$2.75bn in a senior unsecured bond offering in November last year. It had earlier netted US$2.13bn in an equity placement, US$754m from selling a stake in UK national broadcaster ITV, and US$5.1bn through an unsecured bond in September. Around US$596m of the balance of the Sky Italia deal also came from selling Sky’s stake in National Geographic Channels International.
Separately, Sky Deutschland has announced that its CEO Brian Sullivan will be stepping down on 24 June to return to the US. The group has promoted Carsten Schmidt, its chief officer for sports, advertising sales and internet, to replace him.
In September, Sky Deutschland’s management recommended that its minority do not accept the takeover offer from Sky, which was then called BSkyB.
Sky initially agreed to buy a 57% stake of the German group from Rupert Murdoch’s 21st Century Fox for approximately US$4.7bn. It was then required to make an offer for the rest of the group to comply with the country’s takeover law.
However, Sky Deutschland’s board said the €6.75 (US$8.75) per share offer was too low.
Even still, Sky said it held around 96% of the group when it announced the squeeze out proceedings on 17 February 2015.
It bought 100% of Sky Italia from 21st Century Fox for nearly US$4bn.
